Minister defends Steel Mills retrenchment decision

Updated 05 Jun 2020


Hammad says those opposing government’s plan are only playing politics. — DawnNewsTV/File
Hammad says those opposing government’s plan are only playing politics. — DawnNewsTV/File

ISLAMABAD: Federal Industries Minister Hammad Azhar has defended the government’s decision to terminate the services of over 9,300 workers of the Pakistan Steel Mills (PSM), saying that revamping was necessary to revive production there.

Speaking at a press conference on Thursday, the minister slammed the opposition for opposing the government’s revamping plan.

He was flanked by Amir Mumtaz, the PSM board’s chairman, and Sher Alam, its chief executive officer (CEO).

Mr Azhar said 15 investors had shown interest in the core business of steel production at the PSM.

“If we want to revive this industrial unit, it is essential for the government to move away from an ‘owner and operator’ mode to that of ‘owner and policymaker’ and include the private sector in the challenging task of reviving the Steel Mills,” the minister said.

Hammad says those opposing government’s plan are only playing politics

“It is unfortunate that those opposing our plan are only playing politics, even though it was during their tenure that the PSM became a loss-making unit and was shut down.”

Hammad Azhar said the two main opposition parties, a reference to the PML-N and the PPP, should “accept their mistakes and let the nation move on”.

He said the PTI-led government’s decision to release the sugar inquiry report indicated that it wanted to resolve all lingering issues either in the private sector or in the public sector.

The minister said a summary of the PSM’s revival plan would be presented to the federal cabinet for approval soon.

Mr Azhar tried to dispel an impression that some elements wanted to grab the PSM land, saying the privatisation plan included the lease of 1,800 acres. It would take in its fold the existing plant and machinery, while around 18,000 acres of adjoining land would continue to be under the PSM Corporation.

The issue has been lingering for over a decade and all governments have failed to do anything as the once industrial behemoth turned from a profitable entity in 2008-09 into a loss-making unit during the 2008-13 tenure of PPP. It was eventually closed down by the PML-N government.

At one time there were 30,000 employees at the mills, whereas recurring retrenchments, resignation and retirement have whittled down the staff strength to just 9,300.

“In the last five-and-a-half years, Rs55 billion has been spent on the salaries of workers despite the fact the Steel Mills has been non-functional,” Mr Azhar said.

“Since 2008, Rs90bn has been spent on bailout packages and other steps to make it viable.”

The minister said the PSM’s losses had ballooned to Rs176bn by the time the present government took charge and bank loans amounted to more than Rs210bn, while the monthly expenditure was Rs700 million.

“We formed a panel of experts to determine the future of the PSM as we did not want to repeat the mistakes committed by the previous governments.”

He said the PSM liabilities amounted to Rs230bn over and above the Rs55bn given as grants by the government during the last five years.

The total cost of the retrenchment package has been estimated at Rs20bn while the average benefit for each employee will be Rs2.3m.


Dr Abdul Malik, president of the National Party and a former chief minister of Balochistan, has condemned the decision to lay off over 9,000 PSM workers and said he would resist the move at all forums.

In his statement Dr Malik said: “I remind Prime Minister Imran Khan of his promise to turn the Steel Mills and other loss-making entities into profit-making units. As with his other promises, he is reneging on this as well.”

He said some elements seemed to be hatching conspiracies against the largest industrial unit of the country because they had their greedy eyes on the prime land of the mills. “I fear this land will be sold away at ridiculously low prices to please some people close to the power corridors.”

Published in Dawn, June 5th, 2020